Correlation Between Austchina Holdings and Westpac Banking
Can any of the company-specific risk be diversified away by investing in both Austchina Holdings and Westpac Banking at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Austchina Holdings and Westpac Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austchina Holdings and Westpac Banking, you can compare the effects of market volatilities on Austchina Holdings and Westpac Banking and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Austchina Holdings with a short position of Westpac Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austchina Holdings and Westpac Banking.
Diversification Opportunities for Austchina Holdings and Westpac Banking
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Austchina and Westpac is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Austchina Holdings and Westpac Banking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westpac Banking and Austchina Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Austchina Holdings are associated (or correlated) with Westpac Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westpac Banking has no effect on the direction of Austchina Holdings i.e., Austchina Holdings and Westpac Banking go up and down completely randomly.
Pair Corralation between Austchina Holdings and Westpac Banking
Assuming the 90 days trading horizon Austchina Holdings is expected to generate 37.46 times more return on investment than Westpac Banking. However, Austchina Holdings is 37.46 times more volatile than Westpac Banking. It trades about 0.02 of its potential returns per unit of risk. Westpac Banking is currently generating about 0.09 per unit of risk. If you would invest 0.50 in Austchina Holdings on September 2, 2024 and sell it today you would lose (0.40) from holding Austchina Holdings or give up 80.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Austchina Holdings vs. Westpac Banking
Performance |
| Timeline |
| Austchina Holdings |
| Westpac Banking |
Austchina Holdings and Westpac Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Austchina Holdings and Westpac Banking
The main advantage of trading using opposite Austchina Holdings and Westpac Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austchina Holdings position performs unexpectedly, Westpac Banking can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Westpac Banking will offset losses from the drop in Westpac Banking's long position.| Austchina Holdings vs. Nine Entertainment Co | Austchina Holdings vs. Kingsrose Mining | Austchina Holdings vs. Aussie Broadband | Austchina Holdings vs. Seven West Media |
| Westpac Banking vs. Kneomedia | Westpac Banking vs. Alternative Investment Trust | Westpac Banking vs. Autosports Group | Westpac Banking vs. Navigator Global Investments |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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